July 14, 2020 13:23

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Export of interior space: A promising direction for Vietnamese wood

10:15 | 14/02/2020

VCN  - Exports of timber and wood products have maintained a stable growth rate for many years, but most of the value of the industry is in the manufacturing sector. Focusing on the design, brand and export of interior space instead of single products is a promising and sustainable direction for the whole industry.

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Stepping up the design and exporting both interior space brings higher added value than exporting individual products. Photo: S.T.

Difficult, but high profit

AA Construction Architecture Joint Stock Company is a typical enterprise in the wood industry with the orientation to promote the export of interior space. The company built a factory in 1996 and started to produce furniture on contract. Over the past two decades, the company has expanded its markets to North America, Europe, Central Asia and South Asia. AA's customers are the world's largest five-star hotel and resort operators such as Starwood, Accor, IHG, Marriott, Hilton, Hyatt and Fairmont.

Mr. Nguyen Chanh Phuong, Deputy General Director of the company, said thatexporting interior space is no longer a potential but a reality with AA. At the Company's Showroom Gallery in the HCM City Hi-tech Park, five collections of new products and designs that have not been officially introduced to the market are on display. The entire product is produced in accordance with European style, with fairly elaborate color techniques, mainly made by hand. The metal accessories come with simple and complex patterns, requiring careful molding techniques. A table in the new unpublished collection AA is expected to sell for $10,000. Of which, material cost is less than 10percent, profit is about 10percent. The rest is effort to build brand, design andfactory management.

Mr. Nguyen Chanh Phuong said that in order to develop theirproduct, businesses have to start from brand, market and then design. Currently, AA has more than 100 architects and designers. Due to a lack of strong domestic design resources, AA chose to collaborate with foreign designers, using design values to create added value.

“Most of Vietnam now concentrates on production, making it more difficult to make space, especially for foreign work.Many domestic enterprises exporting interior space cannot do it. Therefore, exporting space means that businesses have reached the peak in their careers. Doing the whole project requires many different management skills. Specifically, in addition to making a good product, requiring project management skills, coordinating the entire chain starting from the demand to creating the product.Naturally, exporting both interior spaces will bring more profit,”Mr. Phuong said.

Gradually complete value chain

The General Department of Forestry (MARD) analyzes: In 2019, the total consumption value of the global wood and furniture industry reached US$450 billion, of which the manufacturing sector accounted for only US$140 billion, the rest was divided equally among three areas of creativity, trade and brand. Market potential for Vietnam is still very large. Currently, most of the value of Vietnam's forest product processing industry is still in the manufacturing sector. In a wood product, raw materials and manufacturing only account for 30 percent of the value, the remaining 70 percent is indesign. If the product design is nice, the price will be higher. The world market has passed the price competition, now the quality and inevitable future is the design competition in the direction of increasing personalization. Statistics fromthe British Design Council surveyed 1,500 businesses on the effectiveness of design for business activities and showed that for every £100 spent on design, the revenue increased by £225, helping businesses increase by about 6.3 percent market share.

“In order to reach the set export target of US$20 billion by 2025, the industry cannot continue to solely rely on production value, expand production scale and cheap labor is no longer an advantage. In design and trade, the brand plays a vital role to create competitiveness for Vietnam's wood processing and furniture industry in the future. In the medium term, the orientation of the whole industry is to expand investment in completing the value chain from production, design and trade to brand,”said the representative of the Vietnam Administration of Forestry.

Onthe problem of sustainable exports, increasing the added value for the wood industry, Mr. Nguyen Quoc Khanh, Chairman of Ho Chi Minh City Handicraft and Wood Processing Association (Hawa),said that as the majority of enterprises in the industry are ofa small scale, it is difficult to avoid short-term thinking about capital, but if there is not a long-term development orientation and dedication to the industry, it will be difficult to reach sustainability. Willingness to invest in intangible values such as design, trade and brand is a way for businesses to improve. With design, this is a weakness of Vietnamese businesses, but it is possible to invest in exploitation, from focusing more on training to hiring or buying designs from countries with strengths.

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In the long term, the General Department of Forestry stated that planning of concentrated production areas is an important factor. Distribution of production and processing areas of the wood and furniture industry is now concentrated mainly in localities with traditional strengths: Binh Duong, Dong Nai, Long An, Tay Ninh and BinhDinh. In these areas, it is necessary to focus on exploiting the core production advantages, focusing on the model of concentrated production areas in order to make the most of the region's resources and support from related industries. In addition, it is necessary to take advantage of Ho Chi Minh City and Hanoi, which are major trade and service centers of the country to focus on developing soft values such as design, trade bridges and fairs.

By Thanh Nguyen/Bui Diep